Israel has dramatically escalated its aerial assault on Gaza, hitting hundreds of Hamas targets.

The Palestinians said a family of eight was killed in a strike that destroyed their home. Israel's missile defense system once again intercepted rockets fired by militants at the country's heartland.

Military spokesman Lieutenant Colonel Peter Lerner said Israel struck more than 320 Hamas targets overnight, focusing on underground tunnel networks and rocket launching sites.

That brought the total number of targets hit to 750 in three days of the massive offensive. At least 75 Palestinians have been killed.

Mr Lerner said Israel has already mobilised 20,000 reservists for a possible ground operation into Gaza, but for the time being Israel remained focused on maximising its air campaign. A ground invasion could lead to heavy civilian casualties on the Palestinian side while putting Israeli ground forces in danger.

Neither side is showing any sign of halting their heaviest fighting since an eight-day battle in late 2012. Israel says Hamas must cease rocket fire from Gaza for it to consider a truce.

Militants have fired hundreds of rockets, striking across the length of Israel and disrupting life across the country. No one has been seriously harmed as the Iron Dome defence system has intercepted at least 70 of the projectiles destined for major population centres.

"The ground option needs to be the last option and only if it is absolutely necessary. It is a carefully designed plan of action," Mr Lerner said.

Palestinian medical officials said a strike early today hit a home in the southern Gaza city of Khan Younis, killing eight members of a family.

The Israeli military also said it struck a car in Gaza carrying three Islamic Jihad militants involved in firing rockets. The militant group confirmed that its men were killed in the strike.

At least 20 civilians have been among the 75 deaths reported by the Health Ministry in Gaza, though the exact number is not known.

Israel accuses militants of deliberately endangering civilians by using homes and other civilian buildings for cover. The military has also directly targeted the homes of known militants that it says are used as command centres, though it says it contacts the families first to evacuate.

Yigal Palmor, an Israeli Foreign Ministry spokesman, said Hamas is firing rockets from "within houses and streets and neighbourhoods which are populated with civilians ... exposing these civilians to retaliation and to backfire".

After an overnight lull, militants resumed their barrage toward central and southern Israel. Remnants of a long-range rocket fired from Gaza landed in a petrol station in south Tel Aviv after being shot down by the defence system.

The longer range of the rockets fired from Gaza has disrupted life across southern and central Israel, where people have been forced to remain close to home, and kindergartens and summer camps have closed.

Besides firing towards Israel's two largest cities, Tel Aviv and Jerusalem, Hamas also launched a rocket that reached the town of Zichron Yaakov, more than 100 kilometres (60 miles) north of Gaza.